Bio-Reference Labs Offers Extremely Stable Earnings

Clinical-testing company Bio-Reference Laboratories (BRLI) boosted annual earnings in the 23% to 32% range from 2009 through fiscal 2012 ended in October.

In fiscal 2012, earnings rose 30% on an 18% revenue gain. Growth would've been stronger if not for Hurricane Sandy, which also is expected to trim 3 to 5 cents off EPS in fiscal Q1 ending in January.

Fiscal 2013 EPS growth is seen easing to 17%, the lowest since '08.

That's less than ideal — IBD-style investors prefer stocks with annual growth of 25% or better — but Bio-Reference is extremely steady.

The five-year earnings Stability Factor is 3 on a scale that runs from 0 (calm) to 99 (wild). The three-year Stability Factor is 1.

The company gets about 40% of revenue from routine tests, such as cholesterol tests and urinalyses. Esoteric testing, such as genetics and oncology, account for 60%. Medicare and Medicaid drive a fifth of revenue.

One risk is the federal government's increasing role in the health sector. Reimbursement rates and regulatory changes can add hurdles that go beyond competition in the marketplace.

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03/11/2014 11:18 AM ET

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